A class-action lawsuit says the Minnesota Department of Commerce designed a system to collect unclaimed property and money that benefits government coffers but leaves rightful property owners in the dark.

The suit, filed this week in Ramsey County District Court, says “Minnesota’s policy of taking possession of property it knows it does not own and then selling, keeping, or otherwise benefiting from” the property — valued at more than $600 million — “violates the due process clauses of the United States and Minnesota constitutions.”

The suit was filed by Timothy Hall Jr., who claims he didn’t get a final paycheck after he left a retail job and never got notice it was available. He was alerted to his unclaimed property by his father, who found it on missingmoney.com, the website the state uses to help people track their property, the lawsuit said.

Hall’s attorney, Dan Hedlund of the firm Gustafson Gluek in Minneapolis, said his client pursued a class-action suit because “he wasn’t pleased with the situation of people not getting their money back. And he was surprised to find out that he had money owed to him that he hadn’t received notice about.”

The lawsuit’s main points:

— The state has made great efforts to collect unclaimed property, which includes money and personal items, but has made little effort to notify property owners who can claim what belongs to them.

— The unclaimed money goes into the state’s general fund, meaning the “state has profited enormously,” the suit asserts.

The class action asks the court to determine whether the state’s seizure of unclaimed property without notifying owners constitutes a “taking” — in violation of the Fifth Amendment, which requires “just compensation” if private property is taken for public use.

It also asks for a ruling on whether the state’s use of a website where people can search for their names is adequate notification.

Unclaimed property in Minnesota is overseen by the state Department of Commerce and regulated by the state’s Unclaimed Property Act, which was enacted in 1969 and has been amended several times.

Before the court weighs in on the issues, the Unclaimed Property Act could change again.

Rep. Joe Atkins, DFL-Inver Grove Heights, has introduced a bill that addresses the same concerns as the lawsuit. It is awaiting a floor vote in the House, Atkins said.

Atkins proposes adding three requirements:

— Publication of property owners’ names in a newspaper.

— Proactive efforts to notify owners they have unclaimed property being held.

— Providing names of property owners to legislators, who would conduct their own outreach to constituents on the list.

“We have a lot of other people’s money that belongs to them, not us, and we ought to be doing a better job of getting it back to the rightful owners,” Atkins said.

Atkins said the state ramped up efforts about 10 years ago to collect unclaimed assets from insurance companies and other financial institutions, which resulted in huge increases to the funds.

The value of unclaimed funds and property in the program at the end of fiscal year 2006 was more than $318 million, according to a spokesman for the Commerce Department. As of a few weeks ago, it was more than $654 million.

“The number of claims being processed has increased significantly,” said Ross Courson, spokesman for the department.

In the first nine months of the current fiscal year, 13,759 claims were processed, Courson said. That’s more than the total 13,052 claims of the last fiscal year, he said.

“That’s partly because the Commerce Department has revamped its claims processing to make it more consumer-friendly,” he said. That includes an easier-to-use website and fewer documentation requirements, he said.

While the commerce department has increased its efforts to reach property owners, it hasn’t been enough, Atkins said.

“Something has to change here,” Atkins said. “Even with greater efforts by the department, we’re still falling behind in getting people their money.”

It’s unclear what effect passage of Atkins’ bill would have on the class-action lawsuit.

In California, where a similar class-action suit was filed, lawmakers changed the unclaimed property law, requiring the state to notify owners before property was taken into state custody.

The California class action sought an additional effort of state officials to track down property owners using all available databases. On appeal, the 9th U.S. Circuit Court of Appeals upheld dismissal of the case, saying the law’s new notification requirements were sufficient.

Hall’s class-action lawsuit says, “The purpose of the (Minnesota law) is to protect consumers by placing unclaimed property in the custody of the state pending its return to its rightful owners.

“But Minnesota seizes and uses private property for its own substantial benefit under the (Unclaimed Property Act) without making any meaningful effort to locate the rightful owners of this unclaimed property.”

Hedlund, Hall’s attorney, said he sees this as a problem with a solution.

“I think with some modest efforts, there could be great strides to reunite people with their money,” he said. “And our hope is that this lawsuit will accomplish just that, either in law changes or in how the Department of Commerce deals with it. Because just setting up computers and telling people about missingmoney.com is insufficient to do what needs to be done to reunite these people with their money.”

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